47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 184
A.G. BARR p.l.c. Annual Report and Accounts 2025
N OTE S
TO TH E
ACCO U NT S
CO N TI N U ED
25. Financial risk management continued
Capital risk management
The Group defines “capital” as being net debt (including lease liabilities) plus equity.
The Group’s objective when managing capital is to maintain an appropriate capital structure to balance the needs of the Group, whilst operating within its bank covenants.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group has
a number of options available to it, including modifying dividend payments to shareholders, returning capital to shareholders or issuing new shares. In this way, the Group
balances returns to shareholders between long-term growth and current returns whilst maintaining capital discipline in relation to investing activities and taking any
necessary action on costs to respond to the current environment.
The Group monitors existing equity in issuance on the basis of the net debt/EBITDA ratio. Net debt is calculated as being the net of cash and cash equivalents, interest-bearing
loans and borrowings. The net debt/EBITDA ratio enables the Group to plan its capital requirements in the medium term. The Group uses this measure to provide useful
information to financial institutions and investors. The Group believes that the current net debt/EBITDA ratio together with existing shares in issuance provides a secure
capital structure with a strong level of financial flexibility to enable the Group to take advantage of opportunities that may arise.
For the year ended 25 January 2025, there was a net cash surplus of £63.9m (year ended 28 January 2024: net cash surplus of £53.6m) with cash and cash equivalent balances
of £21.4m and short-term investments of £42.5m (year ended 28 January 2024: £33.6m and £20.0m respectively).
The Group monitors capital efficiency on the basis of the return on capital employed ratio (ROCE). In the financial year ended 25 January 2025, ROCE remained strong at 18.5%
(2024: 18.7%).
26. Retirement benefit obligations
During the year the Company operated the A.G. BARR p.l.c. (2008) Pension and Life Assurance Scheme (the “2008 Scheme”). The 2008 Scheme comprises a funded defined
benefit section based on final salary and a defined contribution section. The defined benefit section was closed to future accrual from 1 May 2016. The defined contribution
section of the 2008 Scheme was closed to new entrants and new contributions from 30 June 2021 and all defined contribution assets (other than additional voluntary
contributions related to members of the defined benefit section) were transferred to the A.G. Barr Retirement Plan, an outsourced master trust pension arrangement,
in September 2021. Under the defined benefit section of the 2008 Scheme, employees are entitled to retirement benefits based on final pensionable pay. No other
post-retirement benefits are provided.
Defined benefit scheme: Actuarial valuation
The assets of the defined benefit section of the 2008 Scheme are held separately from those of the Company and are invested in managed funds. A full valuation of
the defined benefit section of the 2008 Scheme was conducted as at 5 April 2023 using the attained age method and a surplus of £3.2m was determined at that date.
The defined benefit section of the 2008 Scheme exposes the Group to actuarial risks such as longevity risk, interest rate risk and market investment risk.
Responsibility for governance of the plans, including investment decisions and contribution schedules, lies jointly with the Company and the Board of Pension Trustees.
The board of trustees is composed of representatives from the Company scheme members and an independent trustee in accordance with the 2008 Scheme’s rules.
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